HOW IT WORKS
TFR to Pension Fund
Private sector employees can choose between two options for their accruing TFR (i.e., future TFR):
- Transfer the TFR to the Pension Fund;
- Leave the TFR with the company (or with the Treasury Fund managed by INPS for employees of companies with at least 50 employees).
If you choose to transfer the TFR to the Pension Fund, you still have two options:
- Transfer only the TFR (Severance Pay);
- Transfer the TFR plus a voluntary contribution at your own expense, which entitles you to the employer’s contribution.
TFR Calculation
How is TFR calculated?
TFR (Severance Pay) amounts to 6.91% of annual salary. (The salary used for calculating TFR includes all compensation items paid in relation to the employment relationship, unless otherwise provided by collective agreements). Companies calculate and set it aside month by month. If the worker joins Fondapi, the company transfers the TFR directly to the member’s account.
This provides numerous advantages for those who have chosen to join Fondapi. These include:
- The ability to check the amount of accrued TFR at any time;
- Obtaining a financial return from the TFR transferred to the Fondapi pension fund.
Companies also benefit if their employees join Fondapi and transfer their TFR to the pension fund.
Here we discuss the advantages for companies!
TFR Taxation – TFR to Pension Fund vs. TFR with Company
TFR taxation – and other contributions that may be paid – is among the most important advantages offered by second pillar pension schemes and complementary pension funds like Fondapi. The TFR taxation applied by Fondapi is very advantageous: 23%. On average lower than that applied by companies when liquidating TFR.
Furthermore, if the member reaches retirement, the taxation applied to the total amount set aside during the entire working life is between 15% and 9%. (After the fifteenth year of enrollment in complementary pension schemes, it decreases by 0.3% each year)
Online Membership to Fondapi and TFR Advances
It is possible to request advances from Fondapi on your TFR and any contributions paid for the following cases:
- Medical expenses – without enrollment restrictions – up to 75% of your account;
- Purchase/renovation of first home (for yourself or your children) – after at least 8 years of enrollment – up to 75% of your account;
- Expenses requiring no justification – after at least 8 years of enrollment – up to 30% of your account.
We remind you again that it is possible to join Fondapi by contributing only the TFR and then, if desired, decide to also pay a voluntary contribution that creates the right to the employer’s contribution.
Still Have Questions?
Book a completely free telephone consultation with no obligation or send an email to clarify any doubts.
